William K. Black, an Associate Professor of Economics and Law at the University of Missouri, tells Bill Moyers on the JOURNAL that the tool at the very center of mortgage collapse, creating triple-A rated bonds out of "liars' loans" — loans issued without verifying income, assets or employment — was a fraud, and the banks knew it. They involve deceit, which is the essence of fraud.
And while there is no law against liars' loans, Black points out that there are, many laws against fraud, and liars' loans are fraudulent. A few of the names implicated are Henry Paulson & Timothy Geithner,
Only the scale of the scandal is new. A single bank, IndyMac, lost more money than the entire Savings and Loan Crisis. The difference between now and then, explains Black, is a drastic reduction in regulation and oversight, "We now know what happens when you destroy regulation. You get the biggest financial calamity of anybody under the age of 80."
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